Tech Futures:
September 24, 1999
By Michael
Volker
Pink Sheets, Updates on New Media, Portfolio
and VCPs
In recent columns, I've been critical of the
OTC-BB (Over-the-Counter Bulletin Board) stock market in the U.S. A number of
companies, expecially from B.C., have opted to list on this market either
because of their negative perception of the VSE (Vancouver Stock Exchange) or
because they failed to meet the VSE's listing standards.
Many companies on the OTC-BB incorrectly say
that they are traded on the NASDAQ OTC market. In fact, the NASDAQ market has
nothing to do with the OTC! The OTC is an unregulated market and until just
recently, OTC companies did not even have to file their corporate reports,
thereby escaping much scrutiny. Now that the SEC (Securities and Exchange
Commission) in the US is requiring companies to report on a regular basis, many
are being bumped off the OTC. Rather than having to comply, some of these are
going to the so-called "pink sheets" which is yet another form of
stock trading market and one which is just now starting to operate in an on-line
mode.
These pink sheets are managed by the National
Quotation Bureau (http://www.nqb.com). For you students of stock markets, here's
a little history for you. In 1911, a Boston book publisher, Arthur Elliott
thought it was a good idea to provide a quotation service for people wishing to
trade securities. This led to the creation of the National Quotation Bureau (NQB)
in 1913 which published market quotations and distributed these on pink sheets
of paper to stock dealers throughout the U.S.
The Securities and Exchange Commission (SEC) and
the National Association of Securities Dealers (NASD) were created in 1933.
Dealers were able to use the NQB in order to obtain stock quotes.
Thirty years later, NQB was purchased by Commerce Clearing House (CCH), a
publisher of reference books. CCH did not invest in new technologies which led
the NASD to establish the NASDAQ Stock Market®, a real-time quotation service.
The NASD also implemented the OTC-BB market for companies which did not meet the
listing criteria for NASDAQ. This is why many promoters incorrectly associate
the OTC-BB with NASDAQ.
The NQB continued as a paper-based publisher and
was acquired by a new group in 1997 which started using new technology to
improve its services.
Unlisted companies, i.e. those not listed on a
recognized exchange like NASDAQ (or the New York or AMEX exchanges), could be
traded in other markets. These companies did not have to report or disclose
their business affairs to the general public. By the way, the AMEX merged with
NASDAQ last year.
Early this year, the SEC decreed that OTC-BB
companies would have to become "reporting issuers" and start filing
corporate information. This summer, NASD will drop over 3,000 companies from the
OTC-BB for failing to meet these reporting requirements.
The NQB responded to these orphans with the
introduction of a real-time OTC quotation facility for the companies that trade
OTC, i.e. the Electronic Pink Sheets.
Unlike the NASD OTC Bulletin Board (OTC-BB),
Issuers (i.e.companies) do not (at least for now) have to be SEC reporting for a
market maker to quote their securities in the Pink Sheets. The Pink Sheets is a
quotation medium for subscribing members. The NQB continues as a private company
which is not in any way affiliated with NASDAQ or the NASD.
The bottom line is that companies on the OTC-BB
and on the Pink Sheets do not need to meet any listing standards. And the only
difference between the two markets is that the OTC-BB requires more public
information disclosure than does the Pink Sheets.
NASDAQ operates its traditional market as well
as a junior, small-cap market. But even the smallcap component dictates some
stringent listing criteria (e.g. market cap of US$50 million and share price of
$4). Fewer than 20% of the public technology companies in B.C. would meet such a
standard.
This is why I'm such a big fan of the new Canadian Venture Exchange (CDNX)
which I've been commenting on in previous columns. Other than for the choice of
name, I think that this exchange can fit nicely just under the NASDAQ Small-cap
market as
the exchange for Canadian and American venture (especially high tech)
companies.
It will provide a bona-fide regulated
trading environment with established standards for smaller, growing
technology firms, regardless of their location. As they mature they can graduate
to a more senior exchange. The CDNX can be a much better market than either the
OTC-BB or Pink Sheets - especially for investors.
If all goes well with the submissions now in
front of the B.C. and Alberta Securities Commissions, the CDNX could be up and
running by late November (see the CDNX website at http://www.cdnx.ca).
New Media Companies in B.C.
Last week, I identifed B.C. based public
companies in the New Media arena. Here's an updated list with a few additions
(like DVD and WKWG). Are there any others? Please let me know.
| Symbol |
Company |
Price Sep 24 |
More Info |
|
DVD.V
|
Demand
Ventures Ltd
|
$0.40
|
quote/chart,
>website
|
| EDUV |
EDUVERSE
Accelerated Learning Systems |
$0.81 |
quote/chart,
website |
| ELE.V |
Electric
Mail Company |
$1.70 |
quote/chart,
website |
|
EUIN.P
|
Destiny
Software Productions Inc
|
$3.05
|
quote/chart,
website
|
| FCS.V |
FirstClass
Systems |
$0.17 |
quote/chart,
>website |
| IPZ.V |
Image
Power |
$0.40 |
quote/chart,
website |
| MAC.V |
Mosaic
Technologies Corp. |
$0.57 |
quote/chart,
website |
| MCZa.AL |
MC2
Learning Systems |
$2.65 |
quote/chart,
website |
| MER.V |
Medera
Life Sciences |
$2.10 |
quote/chart,
website |
| MFE.TO |
Mainframe
Entertainment |
$2.05 |
quote/chart,
website |
| MTV.V |
Multivision
Communications Corp. |
$0.50 |
quote/chart,
website |
| NNCI |
NetNation
Communications Inc. |
$4.08 |
quote/chart,
website |
| NNS.V |
Net
Nanny Software |
$0.88 |
quote/chart,
profile,
website |
| ORTG |
Orion
Technologies |
$3.38 |
quote/chart,
website |
| PNI.M |
PhotoChannel
Networks, Inc. |
$0.53 |
quote/chart,
website |
| POST |
CyPost
Corporation |
$8.07 |
quote/chart,
website |
|
RNK.TO
|
Rainmaker
Entertainment Group
|
$1.31
|
quote/chart,
website
|
| SCE.V |
SoftCare
Electronic Commerce |
$2.35 |
quote/chart,
website |
| SCS.V |
SCS
Solars Computing |
$0.89 |
quote/chart,
website |
| SWEB |
Stockgroup.com |
$3.13 |
quote/chart,
website |
| SYD.V |
Sideware
Systems |
$2.36 |
quote/chart,
website |
| THW.AL |
Totally
Hip Software |
$0.32 |
quote/chart,
website |
| UTOb.V |
Uniglobe
Travel Online |
$4.05 |
quote/chart,
website |
|
WKWG
|
CityXpress.com
Corp
|
$1.50
|
quote/chart,
website
|
OTC traded companies (the ones without a .V,
.TO, or .AL attached) are quoted in US dollars. The one with the "P"
is an OTC company quoted on the Pink Sheets. I hope that we'll soon see most of
these on the CDNX!
Junior Technology Portfolio - Update
In July 16, I "invested" $25,220 in 10
small, micro-cap companies selected from the T-Net listing of all B.C.
publicly traded technology firms - just for fun to see what would happen if we
tracked this group.
This "starter" portfolio has declined
steadily to $21,510. But, I'll sit tight awhile longer. Unless there's a
fundamental reason to bail out of any of them, I'm going to hang in. I used to
really get a kick out of watching all the day traders hang around the VSE lobby
downtown at Granville & Dunsmuir (before Canaccord took it over). These
fellows would buy and sell on minute-by-minute changes in stock prices on
mining deals as news on drilling programs rolled in. Well, it doesn't work this
way in high tech (at least not as fast) even though many brokers still seem to
think so! Oh, well.
VCP Update
I've been keeping track of "VCP"
companies in this column because they may provide funding to, and in the process
acquire, technology companies. A VCP company is a Venture Capital Pool which is
created on the VSE by financiers interested in acquiring and active enterprise
through a publicly traded vehicle.
Check
our Venture Capital Pools chart
for a complete updated list of the VSE's VCP companies.
In the next column, we'll update the T-Net20 to
include our recent IPOs (CREO and Pivotal).
Michael Volker is the
Director of the University/Industry Liaison Office at Simon Fraser University,
Chairman of the Vancouver Enterprise Forum, and a technology entrepreneur. He
owns shares in many of the companies he writes about. Contact: mike@risktaker.com.
Copyright,
1999.
What
Do You Think? Talk Back To Mike Volker
Tech Futures is a bi-weekly column that focusses
attention on new and emerging BC publicly listed technology companies. Mike
Volker is the Director of the University/Industry Liaison Office at Simon Fraser
University, Chairman of the Vancouver Enterprise Forum, and a technology
entrepreneur. He owns shares in many of the companies he writes about. Contact: mike@risktaker.com
Tech
Futures Archive
T-Net
20 High Tech Stock Index
© 2012 T-Net. All Rights Reserved. |